Stock Investors Get Lump of Coal

By

Chris Dieterich

Updated Dec. 24, 2012 1:53 p.m. ET

NEW YORK—Stocks fell in a shortened session as concerns lingered that a fiscal stalemate could hit the economy in the new year.

The Dow Jones Industrial Average slipped 51.76 points, or 0.4%, to 13139.08, its third decline in four sessions and its worst day-before-Christmas performance since 2006. The Standard & Poor's 500-stock index shed 4.39 points, or 0.2% to 1426.66, and the Nasdaq Composite Index declined 8.41 points, or 0.3%, to 3012.60.

The markets closed early, at 1 p.m., on Christmas Eve.

Declines were shallow but broad, as energy- and technology-sector stocks led seven of the S&P 500's 10 sectors lower.

U.S.-traded shares of BlackBerry-maker
Research In Motion
fell 30 cents, or 2.8%, to 10.61, extending Friday's 23% plunge that was triggered by concerns that a new fee-structure for the company's forthcoming BlackBerry 10 could further erode the company's profitability.

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For weeks, investors have said market moves will hinge on news from policy makers about progress toward addressing the deficit. Optimism about a potential compromise has helped the Dow advance four out of the past five weeks.

"We've been seeing bouts of euphoria and bouts of concern. There's a lot of psychology going on," said
Frank Ingarra,
head trader at NorthCoast Asset Management. "We have some clients that don't like this environment and are going to cash, but it's hard to time, and there's risk of missing some big up days," he said.

Worry surfaced in the markets last week. The Dow fell 121 points on Friday after House Speaker John Boehner scrapped his "Plan B" budget proposal amid a lack of support, prompting questions about whether Congress will be able to reach a budget agreement before a series of spending cuts and tax increases kick in next year.

"It seemed like you were getting a deal with 'Plan B,' then people woke up Friday morning pretty discouraged," said
John Fox,
director of research and co-portfolio manager at Fenimore Asset Management.

Lawmakers said Sunday that it isn't too late to avert the so-called fiscal cliff. Mr. Fox said that he still thinks that some type of a compromise is likely, and that such a deal would likely bolster the market in the short term.

"At the 59th minute of the last hour of the last day, they'll agree to something," he said.

Front-month February crude-oil futures slipped less than 0.1% to $88.62 a barrel, while January gold futures declined less than 0.1% to $1,659 a troy ounce. The dollar rose euro versus the euro and the yen. The yield on benchmark 10-year Treasury bonds rose to 1.774%.

Regions Financial
dropped 12 cents, or 1.7%, to 6.99 on a report in The Wall Street Journal that federal agencies are looking into allegations that the lender improperly classified loans that soured during the financial crisis.

Apple
rose 84 cents, or 0.2%, to 520.17, snapping a three-session losing streak that was brought on in part by reports that
Google
was designing an "X Phone" to rival Apple's iPhone. Google fell 6.13, or 0.9%, to 709.50.

Yahoo
gained 30 cents, or 1.6%, to 19.65 as the Internet company's stock-price target was raised to $26 by Needham, which cited a strong commitment to share repurchases, reduced institutional ownership and low valuations.

Groupon
dropped 19 cents, or 3.9%, to 4.63, as investors had their first chance to trade on Friday's news that the daily-deals site acquired CommerceInterface, a company that operates a platform to help facilitate online sales.

Corrections & Amplifications An earlier version of this story misspelled the name of Rebecca O'Keeffe, head of investment at Interactive Investor.

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